U.S. patent application number 10/107870 was filed with the patent office on 2003-10-02 for method of distributing and selling high end products.
Invention is credited to Boyd, Dennis.
Application Number | 20030187665 10/107870 |
Document ID | / |
Family ID | 28452727 |
Filed Date | 2003-10-02 |
United States Patent
Application |
20030187665 |
Kind Code |
A1 |
Boyd, Dennis |
October 2, 2003 |
Method of distributing and selling high end products
Abstract
An improved method of distributing products to stores of a
members-only chain includes using a vendor to provide for approval
and physical distribution of products sequentially to stores of the
chain and local retailers in each market of the chain for providing
sales, storage and delivery services for products sold in the
chains members-only stores.
Inventors: |
Boyd, Dennis; (Chesterfield,
MO) |
Correspondence
Address: |
David R. Deal
Thompson Coburn LLP
Suite 3500
One US Bank Plaza
St. Louis
MO
63101-9928
US
|
Family ID: |
28452727 |
Appl. No.: |
10/107870 |
Filed: |
March 27, 2002 |
Current U.S.
Class: |
705/500 |
Current CPC
Class: |
G06Q 30/02 20130101;
G06Q 99/00 20130101 |
Class at
Publication: |
705/1 |
International
Class: |
G06F 017/60 |
Claims
What is claimed is:
1. A method of distributing and selling products at a chain of
members-only stores, said chain having a central product approval
authority, said method comprising the steps of: a first party
submitting a request for product approval for a group of products
to the central product approval authority, said first party being
unaffiliated with the chain; said central product approval
authority approving sale of the group of products in at least some
of the stores of the chain; said first party shipping products of
the group to a second party in the vicinity of at least one of the
stores of the chain, said second party being unaffiliated with the
chain; said second party warehousing products of the group in
warehouse facilities controlled by the second party, said store of
the chain having storage facilities associated therewith which are
not the warehouse facilities of the second party; said second party
or said first party providing at least one sales person for selling
products of the group at said store for a limited period of time;
said store providing display space for products of the group in
which said products are displayed and said sales person attempts to
make sales; said store accepting payment for products of the group
purchased by members; and said payment being divided among at least
the chain and the second party.
2. The method as set forth in claim 1 further including the step by
the chain of evaluating the group of products for inclusion in a
continuing line of products carried by the chain.
3. The method as set forth in claim 1 wherein the sales person in
attempting to make sales of product of the group to members
identifies additional products not included in the group of
interest to the members, and in response identifies said additional
products to the second party for potential inclusion in displays at
other stores in the chain.
4. The method as set forth in claim 1 wherein products purchased by
members are delivered by the second party using existing second
party delivery vehicles.
5. The method as set forth in claim 1 wherein the warehouse
facilities of the second party are environmentally controlled.
6. The method as set forth in claim 1 wherein the warehouse
facilities of the second party exceed in size the storage
facilities of said store.
7. The method as set forth in claim 1 wherein the products of the
group are stored in preexisting warehouse facilities of the second
party.
8. The method as set forth in claim 1 wherein the first party
stores data on sales of product of said group from said store of
the chain, said store being a first store, and from said data
generates forecasts of sales of said product at a second store of
said chain.
9. The method as set forth in claim 8 wherein the first party ships
product of the group to a third party in the vicinity of said
second store in amounts corresponding to said forecasts.
10. The method as set forth in claim 9 wherein the amount of said
product sold in said first store during the limited period of time
is less than the amount of said product shipped by said first party
to the second party, so that excess product is disposed in the
warehouse facilities of the second party, said first party shipping
said excess product to the third party after expiration of the
limited period of time.
11. The method as set forth in claim 9 wherein the display of
product at the first store of the chain does not overlap the
display of product at the second store of the chain.
12. The method as set forth in claim 8 wherein the first and second
stores of the chains are in the same vicinity, said first party
shipping product of the group to the second party in amounts
corresponding to said forecasts.
13. The method as set forth in claim 12 wherein the amount of said
product sold in said first store during the limited period of time
is less than the amount of said product shipped by said first party
to the second party, the amount of product of the group shipped to
the second party for the second store taking into account the
amount of said product shipped for the first store but not sold in
the first store.
14. The method as set forth in claim 12 wherein the display of
product at the first store of the chain does not overlap the
display of product at the second store of the chain, the second
party providing at least one of the same sales persons at the
second store as provided at the first store.
15. The method as set forth in claim 1 wherein said chain has a
plurality of stores in a vicinity, said method being performed in a
predetermined sequence at least several of the stores in the
vicinity.
16. The method as set forth in claim 15 wherein the first party
generates forecasts for sales of product at said several stores in
the vicinity and ships product to the second party at times
appropriate for performing the method in the predetermined sequence
in said several stores.
17. The method as set forth in claim 15 wherein the second party
provides at least some of the same sales people at a plurality of
the several stores in the vicinity.
18. The method as set forth in claim 15 wherein the limited period
of time in each store of said several stores is such that the
second party's sales people may work substantially full time in
sales activities at said several stores of the chain in said
vicinity.
19. The method as set forth in claim 15 wherein said several stores
of the chain fall within a circle having a diameter of
approximately seventy miles.
20. The method as set forth in claim 1 wherein the limited period
of time is less than one month.
21. The method as set forth in claim 20 wherein the limited period
of time is approximately three weeks.
22. The method as set forth in claim 1 wherein the products of the
group are selected from predetermined furniture and bedding
products.
23. The method as set forth in claim 22 wherein the products of the
group include bedroom groups and matching case goods.
24. The method as set forth in claim 23 wherein the products of the
group include two different bedroom groups.
25. The method as set forth in claim 22 wherein the products of the
group include specialty sleep mattresses.
26. The method as set forth in claim 22 wherein the products of the
group include at least one product selected from latex pillows,
memory foam pillows, and massage systems.
27. The method as set forth in claim 1 wherein the second party
sales people are paid on a straight commission basis and all
advertising, fees and expenses associated with the method, except
for warehousing and delivery costs and cost of the products, are
borne by the chain and by the first party.
28. The method as set forth in claim 1 wherein the first party
schedules the times during which the method will be performed with
the chain.
29. The method as set forth in claim 1 wherein the first party
generates UPC codes for the products of the group for use in the
stores of the chain.
30. The method as set forth in claim 1 wherein the first party
provides inventory control services for the second party with
respect to the products of the group being sold in said store of
the chain.
31. The method as set forth in claim 1 wherein the second party
provides post-sale service with respect to product purchased by
said members in the vicinity.
32. The method as set forth in claim 1 wherein the second party has
a showroom, said products of the group also being displayed in said
showroom at the same time as said products are displayed at said
store of the chain.
33. The method as set forth in claim 1 wherein said products are
sold at listed prices in said store.
34. The method as set forth in claim 1 wherein the second party
sales people are paid on a strict commission basis, said commission
exceeding a commission paid by the second party to sales people at
second party facilities.
35. The method as set forth in claim 1 wherein the second party at
least participates in the selection of the products constituting
the group.
36. The method as set forth in claim 35 wherein the method is also
performed in connection with a second store of the chain, said
second store being in a different geographic region from the first
store, a third party doing business in the vicinity of the second
store replacing the second party in the method, said third party at
least participating in the selection of the products constituting
the group for the second store, the group of products for the
second store being not necessarily the same as the group of
products for the first store.
37. The method as set forth in claim 36 wherein the third party at
least participates in the pricing of the products offered in the
second store.
38. The method as set forth in claim 35 wherein the second party at
least participates in the pricing of the products offered in the
first store.
39. The method as set forth in claim 1 wherein the first party
ships at least some products of the group directly from the
manufacturer to the second party.
40. The method as set forth in claim 39 wherein at least some
products of the group are shipped to the second party in container
lots.
41. The method as set forth in claim 40 wherein the first party has
warehouse facilities and, in the event of delay in container lot
shipments, ships product directly to the second party from said
first party warehouse facilities.
42. The method as set forth in claim 41 wherein the first party
provides product in the event of said delay in container lot
shipments at a price corresponding to a container lot price.
43. The method as set forth in claim 1 wherein the payment is also
divided with the first party.
Description
CROSS-REFERENCE TO RELATED APPLICATIONS
[0001] None.
STATEMENT REGARDING FEDERALLY SPONSORED RESEARCH OR DEVELOPMENT
[0002] Not Applicable.
BACKGROUND OF THE INVENTION
[0003] This invention relates generally to selling in members-only
stores and more particularly to programs for selling in such stores
using available resources in a new and more efficient manner.
[0004] Various members-only store chains are known. For example,
Sam's Wholesale Clubs are found throughout the country and offer
products at significant discounts to their members. Other such
chains are Costco and BJ's. Only members are allowed to purchase
products at such stores. To provide variety of product offering for
their members, members-only chains frequently offer special items
for a limited amount of time in each store. For example, Sam's
Wholesale Clubs rotate such products into individual stores for a
period of approximately twenty days and prohibit display of the
same special products more than twice per year per store. Such a
program of rotating merchandise through the stores can be used by
members-only chains not only to provide variety, but also to
determine if particular products are well-enough received to add to
the permanent line of products for that chain and/or store.
[0005] One way that members-only chains provide variety in the
product offering is what is called a "road show". In a conventional
road show, a group of products is moved from store to store across
the country. Typically, sales people at the local store are used to
explain and sell the products, or sales people are moved from store
to store across the country with the show. A problem with the first
approach is that the local store may or may not have sales people
trained to sell products of the kind displayed in the road show.
Even if one local store does have such trained sales people, there
is no guarantee that the next store on the road show will, or the
store after that. This problem is particularly acute when the
products in the road show are products such as furniture, rugs and
high-end art that generally require human interaction in connection
with the sale. Such products require some explanation of their
features and are generally sold by trained sales people.
[0006] Moving sales people from store to store with the road show
solves the first problem, but leads to others. For example, moving
sales people from store to store across the country necessarily
involves travel expense and the expense of feeding and housing the
sales people at each location. Moreover, sales people moved from
store to store around the country with a traditional road show
quickly burn out, requiring the hiring and/or training of new sales
people frequently.
[0007] Even if the sales person problem is solved, there remain
other problems with road shows. For example, there are unique
logistics problems associated with many road show products. For
example, furniture typically must be delivered to the home of the
purchaser and, in many cases, set up. This requires delivery, which
many members-only stores are not routinely equipped to provide.
Large goods such as furniture must also be stored pending sale. But
members-only stores are often not equipped to handle the storage of
these "special" items in the quantities required to make the road
show a success. Such goods could be stored in containers on the
parking lot of the members-only store. But such containers are not
environmentally controlled, so damage to the products could easily
result.
[0008] Road shows suffer from other problems. Product that may be
suitable for one area of the country may not be optimal for another
area. Using an example from the furniture area, houses in the
northeastern part of the United States are on average smaller than
in other parts of the country. As a result queen size beds are
relatively more popular than king size beds in the Northeast.
Moreover, narrower and taller case pieces are preferred in the
Northeast to accommodate the smaller bedroom sizes and narrow
staircases. Conventional road shows ignore these regional
differences, and in any event have no organized method for taking
them into account. Moreover, regional differences can also impact
the sales person/customer interaction when the sales people move
with the show. For example, with a traveling sales person, a New
York sales woman could easily be attempting to sell product to an
Alabama customer. This situation raises unnecessary barriers to a
sale.
[0009] Traditional road shows also suffer from other logistical
problems. For example, maximum cost efficiency is achieved in
connection with these shows if large containers of products are
received at the local members-only store only shortly before the
opening of the road show at that store. But what if shipment is
delayed? And who has the knowledge to accurately forecast the
volume of product that will be needed at any particular stop on the
road show? These problems seem to be insoluble for traditional road
shows.
[0010] Because of the various problems inherent in traditional road
shows, the profit margins achieved from the shows are lower than
desired. These relatively low margins tend to force the road shows
to attempt to reduce commissions, resulting in even higher turnover
of sales people.
[0011] Some members-only chains have a road show coordinator, but
that person cannot be expected to solve all the problems inherent
in a road show. For example, forecasting the requirements of
products (which products by definition are unique for the chain)
for any particular store along the road show can be a daunting
task. Moreover, the chain road show coordinator can become aware of
shipment delays, but typically lacks the tools necessary to
compensate for those delays. And, a single road show coordinator,
no matter how talented, cannot be expected to have expertise
concerning the variety of products to be offered in the various
road shows used by that chain in a single year.
[0012] Conventional road shows, therefore, have significant
disadvantages and associated increased expenses that make the shows
less successful than they might otherwise be.
SUMMARY OF THE INVENTION
[0013] Among the various objects and features of the present
invention are the provision of an improved method for conducting
road show for members-only chains.
[0014] Another object is the provision of such a method that
overcomes the hurdles involved in selling product for a limited
amount of time in a single store.
[0015] A third object is the provision of such a method that allows
chains to intelligently evaluate road show products for inclusion
in its permanent line of products.
[0016] A fourth object is the provision of such a method using
experienced, local sales people, while significantly reducing the
problem of burnout.
[0017] A fifth object is the provision of such a method that is
particularly suitable for products requiring human interaction in
connection with the sale of products and/or logistical support
during the road show.
[0018] A sixth object is the provision of such a method that has
reduced cost and expense.
[0019] A seventh object is the provision of such a method that
provides environmentally controlled storage facilities for road
show product at minimal marginal expense.
[0020] An eighth object is the provision of such a method that
takes into account regional differences in the desired selection of
products to be sold in the road show.
[0021] A ninth object is the provision of such a method that
handles logistics in an improved fashion.
[0022] A tenth object is the provision of such a method with
improved forecasting.
[0023] Different embodiments of the invention may involve one or
more of the objects and features mentioned above. Further features
and advantages of the present invention, as well as the structure
and operation of various embodiments of the present invention, are
described in detail below with reference to the accompanying
drawings.
BRIEF DESCRIPTION OF THE DRAWINGS
[0024] The accompanying drawings, which are incorporated in and
form a part of the specification, illustrate the embodiments of the
present invention and together with the description, serve to
explain the principles of the invention. In the drawings:
[0025] FIG. 1 is a schematic diagram illustrating various
relationships among the entities performing the present method.
[0026] FIG. 2 is a block diagram illustrating one possible set of
products particularly adapted for sale using the present
invention;
[0027] FIG. 3 is a block diagram illustrating a second possible set
of products particularly adapted for sale using the present
invention;
[0028] FIG. 4 is a block diagram illustrating a third possible set
of products particularly adapted for sale using the present
invention; and
[0029] FIG. 5 is a block diagram illustrating a fourth possible set
of products particularly adapted for sale using the present
invention.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS
[0030] Referring to the accompanying drawings in which like
reference numbers indicate like elements, FIG. 1 illustrates in
diagrammatic form a chain of members-only stores having stores in
five different localities or vicinities labeled L1-L5. For example,
locality L1 could be the Boston, Mass. metropolitan area, locality
L2 could be the Atlanta, Ga. metropolitan area, locality L3 could
be the St. Louis, Mo. metropolitan area, L4 could be the Phoenix,
Ariz. metropolitan area, and L5 could be the Seattle, Wash.
metropolitan area. FIG. 1 is not to scale. The number of vicinities
and individual stores involved with a particular members-only chain
could be much larger than the five shown in FIG. 1. For example,
Sam's Wholesale Clubs are believed to have over 500 markets
nationally in which it has stores. A small number of stores and
localities are shown solely for clarity.
[0031] Each locality or vicinity has a plurality of stores
(although the present method may also be used where a single
locality has only a single store). Thus, locality L1 has four
stores S1-1 to S4-1 of the chain, locality L2 has five stores S1-2
to S5-2, locality L3 has four stores S1-3 to S4-3, locality L4 has
six stores S14 to S64, and locality L5 has seven stores L1-5 to
L7-5. It is preferred, for reasons that will appear that a vicinity
or locality have stores of the chain that are in a reasonable
driving distance, such as seventy miles.
[0032] Each of the stores of the chain receive approval from a
central product approval authority 11. In the event that the
central approval authority is the home office of the chain, the
stores also report sales and inventories back to the home office
11. Approval and reporting between the central authority and the
stores is indicated by the dashed lines on FIG. 1.
[0033] As noted above, a system with a central approval authority
11 and a plurality of stores S around the country is not
particularly well-suited for conventional road shows. The present
invention overcomes many of the problems inherent in conventional
road shows by including in the process a first vendor 15, and local
retailers LR-1 to LR-5 in each of the localities L1 to L5. Although
only a single local retailer is shown for each locality, the method
of the present invention could also use a number of local retailers
in each locality as desired. Vendor 15 is in communication with
each of the local retailers LR-1 to LR-5 and with the central
approval authority 11, all as indicated by solid lines in FIG. 1.
Vendor 15 is also in communication with a manufacturer(s) 17, and a
central warehousing facility 19. If desired, vendor 15 may also be
in direct communication with the various stores S of the chain, or
communication may take place between vendor 15 and the stores S
through the central office 11.
[0034] In this method the vendor 15 undertakes many of the
responsibilities that normally fall upon the central office of the
chain. In the following example, vendor 15 is responsible for
national distribution of furniture (and more particularly bedroom
furniture) in the road show format, although the present invention
is not limited to the distribution of furniture.
[0035] Vendor 15 selects and contracts with local retailers LR in
each geographical market in which the members-only chain desires to
have a road show. As mentioned above, such chains utilize road
shows to enhance its value to its club members by offering non "in
line" items at very attractive prices. These products are rotated
into each store for a limited time (approx. 20 days) so that the
chain can constantly update and refresh its product assortment as a
benefit to its club members.
[0036] In this example of the present invention, vendor 15 offers
four unique road show offerings (shown in FIGS. 2-5) that have been
approved by the central product approval authority 11. For example,
each road show offering could consist of:
[0037] 1. Two different bedroom groups with two beds per group (4
total) and full set of matching case goods for each group.
[0038] 2. Four different specialty sleep mattresses.
[0039] 3. Accessory racks including latex pillows, memory foam
pillows, and massage systems.
[0040] Vendor 15 is responsible for obtaining product approval for
these offerings from the central product approval authority 11. The
central office may then treat the products sold on the road show as
a separate store for accounting purposes.
[0041] In fact, vendor 15 can be responsible for several steps in
the process that are difficult for the stores S or the central
office 11 to perform. Similarly, the local retailers LR are not
well-suited to perform such tasks. For example, vendor 15 can do
the following:
[0042] 1. Schedule the road show venues with the central
office.
[0043] 2. Set up the sku numbers with the chain.
[0044] 3. Generate the appropriate UPC codes to selling through the
chains point-of-sale system.
[0045] 4. Provide sales data feedback through the retail link
system twice/week for each location (see example).
[0046] 5. Provide in-store inventory tracking sheets to facilitate
stock replenishment.
[0047] 6. Be responsible for shipping all product to be sold in the
road show.
[0048] 7. Perform pre-show e-mail marketing to those club members
in the market area near the next store on the road shows
itinerary.
[0049] 8. Liaison with the chain on any issues, questions or
concerns the local retailer has.
[0050] 9. Reconcile payment weekly between the chain and the local
retailer.
[0051] The vendor 15 also plans forecasts and replenishes product
in combination with the local retailer based upon substantial data
from previous sales (either at previous stops of the road show,
during previous shows with this local retailer, and/or during
previous shows at this members-only store S. Based upon the
forecasts, vendor 15 arranges with manufacturer 17 to ship the
selected product in the appropriate quantities directly to the
local retailer LR for the up-coming road show event. (Excess
product can be sold at the next road show.) In is preferred in the
present method that product be shipped in container lots from the
manufacturer 17. This enables the price to the customer to be set
at an extremely attractive level, while still leaving significant
profit for the vendor, the chain, and the local retailer. In some
cases the manufacturer might be located in a foreign country (such
as China), making delivery of the container of product on an
accurate schedule difficult. This potential problem is overcome in
the present method by making product available from the vendor's
central warehouse facility 19 in those cases in which container
shipment is otherwise delayed. In one aspect of the invention, the
vendor 15 makes the product available from its warehouse at the
same price as the direct container lot price to facilitate the
operation of the method.
[0052] A key to the present invention is the fact that vendor 15
partners with local retailers LR in each market to facilitate,
promote and successfully execute the road show so that it will be a
profitable experience for the club member, the chain stores S, the
vendor 15, and the retailer LR. The local retailer LR is familiar
with the product features (and prices) that the local customer will
be interested in. The vendor 15 uses this information in
determining what products to have shipped to the local retailer LR
in a particular market.
[0053] The present invention can be very advantageous to the local
retailer LR, generating significant profits for no additional fixed
costs. The local retailer incurs only the cost of the product and
the cost of setting up and taking down the product display at each
store S for which it is responsible for the road show. All
advertising, rent, utilities and fees are born by the chain and
vendor 15. The local retailer LR is responsible for providing at
least one and preferably two salespeople to work each show, which
are paid a straight commission.
[0054] In the example given above, vendor 15 offers multiple sku
options, so that it is possible to offer up to four unique shows,
twice per year, per store S (8 total shows/year/members-only
store). Depending on the number of stores S in the local retailer's
market, this gives the local retailer LR the ability to do
continuous shows back to back in their marketplace. Ideally, the
local retailer LR would have a consistent crew of 2 salespeople to
begin a new show every 20 days. One crew of 2 people could do 18
consecutive shows/year (360/20 days=18). Note that this allows
maximum use to be made of the salespeople trained to sell the
products. Note as well that since a local retailer LR only services
road shows occurring in its vicinity (e.g., within seventy miles),
the expense of overnight travel is not incurred. Since the
salespeople return to their own homes each day, the problem of
burnout is also significantly reduced.
[0055] The local retailer benefits from this arrangement since
otherwise it might not have access to the customers of the
members-only chain. Such customers tend to be very loyal and shop
regularly at their chain. The local retailer LR would not normally
be able to access this customer through their retail store.
Moreover, due to the margin structure of the vendor and the chain,
as described in more detail below, the pricing offered at the
members-only chain store S is much lower than normal retail pricing
for these product, which allows the local retailer LR to increase
sales volume without a corresponding increase in overhead.
[0056] In return for these advantages, the local retailer provides
the salespeople, local storage of product to be sold at the
members-only store S, and local delivery service for the products
sold at store S. The local retailer may also provide any needed
service after the sale. Note that the local retailer LR usually has
its own warehouse facilities suitable for storing product of the
type sold in the road show. For example, environmentally controlled
storage is desirable when the products sold in the road show are
furniture. Since the local retailer already has this storage, the
incremental cost for storing the product in connection with the
road show is basically zero. This storage is vastly superior to the
alternative of simply storing the product in a container on the
parking lot of the members-only store S. Note that most
members-only stores have minimal backroom warehousing capability,
so that without the storage facilities of the local retailer,
additional costs would have to be incurred. Similarly, the local
retailer LR already has delivery facilities (vehicles and
personnel) for delivering product of this kind to the consumer.
Again, the incremental cost of delivery for the local retailer is
minimal in this situation.
[0057] The present method has superior results when the commission
paid to the salespeople exceeds that paid by the local retailer LR
at its own retail store. This difference in commission is justified
by the fact that rent, utilities, advertising, and other such costs
are not incurred by the local retailer LR in connection with the
sale of products at the members-only store S. The higher commission
(for example, nine or ten per cent) is used to attract superior
sales personnel to selling at the road shows. Such salespeople
should be congenial, high energy and helpful while still being
aggressive enough to ask for the sale. A salesperson that has been
successful at home shows or mall sales should do well with these
road shows.
[0058] The present invention allows the chain to evaluate new
products for the market of each store S before adding them to the
regular product line. It also allows new products to be considered
for inclusion in the road show by taking into account the input of
the local retailer LR for each market.
[0059] As various modifications could be made in the constructions
and methods herein described and illustrated without departing from
the scope of the invention, it is intended that all matter
contained in the foregoing description or shown in the accompanying
drawings shall be interpreted as illustrative rather than
limiting.
* * * * *